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TRANSCRIPT
Is an organisation set up to provide goods or services to potential
customers
Business
Commercial Business
The aim of a commercial business is to generate a
profit e.g. Dunnes Stores, Easons
Are not profit driven business but are concerned with others and doing good
in the society e.g. St. Vincent de Paul
Non-Commercial Business
Stakeholders Different groups of
people who are directly affected by how a
business is run
LC Business – Key Definitions
Is a person who sees an opportunity, has the initative and takes a risk to set up a
business in the hope of being successful and generating a
profit
Entrepreneur
Employee Is a person contracted to perform particular tasks in return for
payment
The people who provide a business with the finance it
needs
Investors
Managers The people responsible for the
running of the business and achieving its goals. This is done by planning,
organising and controlling all aspects of the business whilst showing
leadership, motivation and communication skills
LC Business – Key Definitions
Provide a vital range of services that a business needs
to operate e.g. Insurance firms provide a business
insurance
Service Providers
Suppliers Supply the raw materials that are needed by the
producers e.g. The Musgrave Group supplying
Supervalu
Businesses that take raw materials and manufacture them into finished or semi-finished products using the
four factors of production, land, labour, capital and enterprise e.g.
Tayto take potatoes and manufacturer them into crisps
Producers
Consumers A person who buys
goods or services for their own personal
use
LC Business – Key Definitions
Are people who purchase goods from a business for their own use or for
resale to others
Customers
Employers When an entrepreneur hires staff to preform
different tasks and pay them money
Is an organisation which represents the common view
point, objectives and goals of a particular group or people e.g.
IBEC – Irish Business and Employers Confederation
An Interest Group
Co-operative Relationship
Where the parties involved are working towards a common goal
or objective. The parties are acting in a mutually beneficial
manner. It is seen as a win-win situation
LC Business – Key Definitions
Where both parties work against each other. It is a win-lose situation as each go after the same thing and only one can get it. It can have a
negative impact on the success of the entire business
Competitive Relationship
Contract Is a legally binding
agreement between two or more parties that can be enforced by a court of
law
Is a promise by the person making the offer to be bound by the contract
if the offer is accepted properly
Offer
Acceptance When both parties agree to the terms of the contract. It must
be identical to the offer without any changes. The offeree must accept within the specified time
LC Business – Key Definitions
Is only an offer for someone to make an offer, which can either be
accepted or rejected. Goods on display are only inviting customers to
make an offer. They can do so by bringing the goods to the checkout
and offering to buy them
Invitation to Treat
Consideration Each party in a contract must benefit (Quid Pro Quo) E.g.
John buys a premises from Mary for €100,000. John gets the
premises and Mary gets €100,000
Both parties entering into a contract must be aware that they are creating a legally
binding agreement that can be enforced by the law
Intention to Contract
Legality of Form
Is the manner in which a contract is drawn up. A contract can be made orally, in writing or by action. Some contracts may need to be in writing to be legally binding e.g. The sale
and purchase of property
LC Business – Key Definitions
A contract can only be made for legal purposes and not for
illegal activities e.g. A contract cannot be formed to
import illegal substances
Legality of Purpose
Consent to Contract
Parties entering into a contract do so of their
own free will and are not forced into a contract
A person or business entering into a legally binding agreement has the power and legal ability
to do so e.g. A person under the influence of alcohol or drugs do not have capacity to contract
Capacity to Contract
Ultra Vires When a company director acts outside the objectives
set in the company’s Memorandum of Association
LC Business – Key Definitions
Both parties in the contract have fully carried out their duties as outlined so the contract is terminated by
performance
Performance
Agreement (Termination)
When the parties involved agree to bring the contract to an end e.g.
employee giving the employer two weeks’ notice that they are leaving the job which will bring the contract
of employment to an end by agreement
When an unforeseen event occurs making it impossible
to carry out the contract e.g. death of one of the parties to the contract
Frustration
Breach of Contract
When one party to the contract fails to honour their side of the contract making
the contract terminated
LC Business – Key Definitions
Is the remedy for a breach of contract by which a sum of
money is awarded to the injured party putting them in the same
financial position before the contract was broken
Sue for Damages
Specific Performance
Is the remedy for a breach of contract by which the party in
breach of the contract are ordered by the court to carry out their obligations in the
contract
Is the remedy for a breach of contract by cancelling the contract and retuning both
parties back to same position they were in before the contract
began Rescinding
the Contract
Industrial Relations
Is the relationship that exists between employers and
employees in a business and how they co-operate and
communicate with each other
LC Business – Key Definitions
Organisations that represent the view of and interest of
employees in matters concerning pay and
conditions of employment
Trade Union
Shop Steward
Is the trade union representative in the
workplace who acts as a link between the trade
union and the workplace.
Parties do not involve the law, an office or an
organisation set up under law to resolve their
conflict
Non-Legislative
Legislative Parties involve the law, an office or an organisation
set up under law to resolve their conflict
LC Business – Key Definitions
The employees do not enter their workplace and there is a complete
withdrawal of labour. The employees must hold a secret ballot, give their employer 7 days notices and have
approval from ICTU before they can go on official strike
Official Strike
Primary Picketing
Employees form a picket line and march with placards outside
their employers business premises peacefully
communicating in protest against their employers
If another business/employer assists the employer of the original dispute, the employees can form a picket line and march peacefully
outside the premises of that employers premises
Secondary Picketing
Work-to-rule The employees do their work
as per their employment contract and will not complete
any extra duties outside of those stated in their contract
LC Business – Key Definitions
Where employees refuse to work overtime. This can result in a drop in production which can lead to a loss of sales and
custom for the business
Overtime Ban
Token Stoppage
A brief stoppage of work to highlight the employees
frustration and threaten to taken more serious action if an
agreement is not reached
Is where the settlement of a dispute is sent before one or a group of
independent persons for adjudication. The parties involved agree in advance of the arbitration process and agree if
the decision will be binding or not
Arbitration
Conciliation Gets the two sides in the dispute to listen to each other’s points of view, to discuss the issues and negotiate an agreed settlement before the
dispute grows into a serious one. The decision is not legally binding
LC Business – Key Definitions
When working conditions become so intolerable for an employee by the employer
he/she has to leave
Constructive Dismissal
Redundancy Occurs when employees are
let go from their job as there is no longer enough
work for them to do
Arises when employees are not given the choice t stay in employment,
they must leave
Compulsory Redundancy
Voluntary Redundancy
Is offered to employees to apply for it and are often
offered a financial incentive to take voluntary redundancy
LC Business – Key Definitions
Any act of conduct which is unwelcome, offensive and
intimidating. It can include spoken words, gestures and the
display/circulation of written materials or pictures
Harassment
Discrimination Is the treatment of a person
in a less favourable way than another person is, has been or would be treated
Occurs when two people are in dispute. The pursuit in their goal may damage the other
party they are in conflict with Conflict
Ombudsman Investigates complaints about
government and local authorities after all other routes
have been tested
LC Business – Key Definitions
Promotes consumer welfare and provides information to
business’s to encourage and enforce compliance with the
Consumer Protection Act 2007
Competition and Consumer Protection
Commission
Small Claims Court
Deals with customer/business complaints about purchased
goods/services for private use up to the maximum value of
€2,000
Let the buyer beware : a consumer should use their
common sense when buying goods/services
Caveat Emptor
Enterprise Is being innovative, creative, flexible and dynamic while
taking a personal and financial risk to achieve a goal e.g.
diversification into a new market
LC Business – Key Definitions
Personal qualities and traits which we are naturally born with and are difficult to be learned e.g. Innovative, hardworking, ambitious
Characteristics
Skills Is an ability which can be
gained through practise and experience and can be improved
through training e.g. communication, organisation
Involves entrepreneurial activity by employees within the business by
coming up with new ideas or ways to improve and grow the business to
generate a profit
Intrapreneurship
Management Refers to the ability to achieve
planned goals and activities through other people. The key
activities include planning, organising and controlling
LC Business – Key Definitions
Is the ability to influence and direct others to achieve a particular goal. It involves
directing staff, setting a clear example and delegating work
Leadership
Motivation Is the willingness of
people to work hard and contribute their best
effort
Is the exchange of information between
individuals, businesses and organisations. It can be written, oral or visual
Communication
Memo
Is a brief message sent within a business e.g. :
MEMO To: All Customer Service Staff From: Ann Kelly, Customer Service Manager Date: 12th June 2018 RE : Customer Service training day to be held on the 26th of June 2018 in conference room A at 15:00 pm Signed: Ann Kelly Title: Customer Service Manager
LC Business – Key Definitions
The first meeting the business holds, to inform shareholders about the
business
Statutory Meeting
Agenda A list of matters to be discussed at a meeting
Taken by the secretary, it is a written record of the
business that occurred at a meeting
Minutes of Meeting
Quorum Is the minimum number of people that can be present before a meeting can start
LC Business – Key Definitions
Information that is stored about us
Data
Data Subject
A person who has information stored
about them
The people, organisations and
businesses that store and keep data
Data Controller
Data Protection Commissioner
Is responsible for ensuring people’s rights are respected and that
organisations that keep data meet their responsibilities
LC Business – Key Definitions
Is the way in which individuals personal
information is safeguarded by privacy rights
Data Protection
Is the setting down of goals and putting in place strategies
that allow the business to achieve these goals
Is a short term plan between one to two years, drawn up by middle
management. It outlines a set of actions to help the business achieve short term goals/objectives e.g. Coca
Cola launch a new advertising campaign
Tactical Plan
Strategic Plan
Is a long term plan for 5 years or more, made by top management
with emphasis on business growth and improvement e.g. Cadbury’s
plan to launch a new product globally
LC Business – Key Definitions
Planning
Outlines the businesses purpose and objectives, plans for the future and
reason for existence
Mission Statement
Contingency Plan
An emergency plan which is designed to protect a business in the event of some unexpected event occurring e.g. Having a
second source for raw materials in the event of flooding/fire
Involves arranging all the people, resources and finances in the most sustainable form in order to achieve the objectives
of the business
Organising
Organisational Structure
Identifies the different departments in an
organisation
LC Business – Key Definitions
Is the number of employees that report
directly to one manager
Span of Control
Management Controlling
Is the constant monitoring and checking of results to see if they are in line with the goals and targets set
out in plans
Is the monitoring of stock levels to ensure there is enough to meet customer demand while keeping
costs to a minimum. The aim is to ensure the business has the correct
amount of stock at all times
Stock Control
Buffer Stock Is the minimum amount of stock that should be held
in a business
LC Business – Key Definitions
A stock control system which requires careful planning and a dependable system where goods/raw materials are delivered just when they are
needed. The aim is to reduce the cost in storing stock
Just in Time
Debtors Are people who owe the business money. They have bought goods on
credit and owe for them
A person/business/organisation that owes money to. E.g. a
supplier gives products on credit to a business, the business is
the creditor
Creditors
Credit Control
Is the monitoring of which customers are given goods on
credit, the setting of credit limits and a time frame and checking credit worthiness
LC Business – Key Definitions
Measures the financial affairs of the business, ensuring it is
profitable and can pay bills. E.g. Cash flow Forecast, Break Even
Chart, Ratio Analysis
Financial Control
Quality Control
Checking the efficiency of production and carrying out inspections to ensure the product meets the highest
of standards
Is a financial plan for the future. It shows the planned money in
and the estimated flow of money out of a business over a
certain period of time
Cash Flow Forecast
Short Term Finance
Is finance available for a period of up to one year and it should be repaid
within 12 months
LC Business – Key Definitions
Is offered by a bank to current account holders to withdraw more
money than what is in their account. An agreed limit is set on the amount that can be overdrawn and interest is charged. This money can be used to pay short term expenses e.g. wages
Bank Overdraft
Accrued Expenses
These are expenses which do not have to be paid for until after the service is provided. This allows a
business to free up cash to use for short term expenses e.g. paying
for supplies
Finance for one to five years and is usually used to purchase
machinery, vehicles and equipment
Medium Term Finance
Hire Purchase
Is the purchase of an asset and pay instalment for an agreed period of time. The buyer can use the asset
immediately but does not become the legal owner until the final instalment
is paid. No collateral is needed
LC Business – Key Definitions
Is the renting of an asset for an agreed period of time. The lessee
has possession and use of the asset and pays the owner for this use but does not ever own it. No
collateral is needed
Leasing
Medium Term Loan
Is a loan from a financial institute for one to five years. It is paid
back in agreed instalments over a period of time. Banks usually
demand security and interest is paid
Is a form of long term finance taken out to buy/build property or for
business expansion. It is taken out for more than 5 years. The amount
borrowed is paid back in agreed instalment and interest will be charged. Collateral is required
Long Term Loan / Mortgage/ Debenture
Equity Capital
A long term source of finance. A company raises money by
selling shares. Shareholders receive dividends
LC Business – Key Definitions
This is when the profit is not paid out in dividends to
shareholders but re-invested into the business for expansion. There is no loss of control, no
interest and no collateral
Retained Earnings
Risk Management
Is the planned approach to the handling of the risk that an individual
or business is exposed to by identifying key risks, the effects of these risk, minimising the risks and what to do if and when these risks
occur
Is protection against something that might
happen e.g. house fire, car crash, flooding of
premises
Insurance
Premium Is the amount of money paid to the insurance company to cover the risk involved. The
higher the risk the higher the premium
LC Business – Key Definitions
Provides protection for a risk that will happen
e.g. death
Assurance
Insurable Interest
A person can only insure an asset that they benefit financially by its existence and suffer financially by its loss e.g. a person can insure
their own house but cannot insure their neighbours house
All information disclosed to the insurer must be honest. All material facts must be supplied to the insurer which may impact the price of the premium e.g. a provisional driver
applying for insurance must disclose that they do not have a full license
Utmost Good Faith
Indemnity A person cannot make a profit from
insurance. Insurance cover can only put you in the same position you were in before the
event occurred, not better e.g. A person buys a car worth €10,000 and insures it. 2 years later the car is worth €7,000 and is crashed.
The insured can only receive a maximum compensation of €7,000 for the loss
LC Business – Key Definitions
After the insurance company has paid out compensation to the insured
person/business for the loss suffered, the insurance company can then sue a third party responsible for the loss. They can also take possession of the
item
Subrogation
Contribution If the loss suffered is insured by more than
one insurer than the amount claimed is divided proportionally between the insurance
company e.g. a premises is insured with company A for €200,000 and company B for
€100,000. A fire causes €30,000 damage then A pays €20,000 and B €10,000
When an item is under insured. Compensation is only paid out in
proportion to the value of the item insured.
Amount Insured X Loss = Total Value
Average Clause
Taxation Is charged by the government
on the income of individuals and businesses and on goods and services. The money is used to finance government spending
LC Business – Key Definitions
Used to apply for a cert of tax credits and a standard cut off point. It must be
completed before employment starts
Form P12 A
Form P 60 Issued by an employer to an
employee at the end of the financial tax year. It shows gross pay, income tax and PRSI paid. It is needed for claiming over paid tax and proof of income for education grants and
medical card
Is the summary of tax paid for the year and will
determine if you over paid or under paid tax
Form P 21
Form P 45 Issued by an employer to an
employee when leaving employment. It shows gross pay, income tax and PRSI paid to the current date. It will be needed when starting a new job,
claiming social welfare or a tax refund
LC Business – Key Definitions
Is an allowance from the government which reduces the amount of tax payable and can
be determined by personal circumstances e.g. PAYE tax credit, Trade Union tax credit
Tax Credits
Capital Gains Tax
The tax paid on the profit earned by the sale of an asset
such as property. The tax is not applied to the sale of a private
residence
Is the tax paid on profits made by companies. The current rate in Ireland is
12.5%
Corporation Tax
VAT (Value Added Tax)
Is an indirect tax charged on the sale of goods and services. It is charged at different rates
depending on the type of goods/service involved
LC Business – Key Definitions
Is the tax paid on the amount of interest earned on money in a
savings account. The bank deducts the tax before the person receives the interest
Deposit Interest Retention Tax (DIRT)
Self-Assessment Income Tax
Applies to self-employed people who calculate their own liability for the
year and pay on the 31st of October every year. It can be subject to random audits by the Revenue
Commissioners to ensure the tax returns are accurate
Recruits, trains and rewards the workforce so that the objectives of the firm are
achieved
Human Resource Management
Recruitment Is attracting suitable candidates to apply for
vacancies in the business
LC Business – Key Definitions
A document that describes the job to be filled. Details
such as job title, rate of pay, hours, duties and
responsibilities
Job Description
Person Specification
Is a document that describes the person needed to fill a job
vacancy. Details such as qualifications, skills and characteristics required
Ensures that employees have the up-to-date
knowledge and skills to do their job
Training
Development Providing employees with
additional skills and knowledge that will give them more opportunities
LC Business – Key Definitions
The training received by new employees. They are introduced to
other employees and management, shown the mission statement and code of ethics and are shown around the workplace
Induction Training
Performance Appraisal
Is a meeting between the Human Resource Manager and employees
to examine the employees performance, discuss their
progress and identify training or development needed
Employees receive an agreed rate of pay per week
or month based on a standard number of hours
worked
Flat Rate
Time Rate Employees are paid per
hour at a fixed rate. If they work overtime the pay per
hour increases
LC Business – Key Definitions
Is being paid for each item produced, subject to quality. The staff who work quickly
and diligently will receive the greatest pay
Piece Rate
Commission Is an extra payment based on the percent of sales achieved e.g. a
sales rep may receive 10% of the value of the goods they sell. This will increase their motivation to sell more for a bigger reward
These are extra benefits given to employees along with their wages. They are usually goods or services rather than money and increase
staff motivation e.g. Company car, free health insurance
Benefit-in-kind
Flexi -Time Allowing employees to pick their own start and finish time as long as the minimum hours are worked e.g.
Employees must be in work between 10:00-14:00 but can choose their
start and finish time as long as they work a 38 hour week
LC Business – Key Definitions
When two people share one job e.g. employee A work’s one
week on and one week off and the employee B works the week
when employee A is off
Job Sharing
Teamwork Is a group of employees co-
operating and working together towards a common
goal
When the team is brought together to meet and
discuss the task at hand Forming
Storming Team members test
relationships as conflicts begin to arise. Members try to
establish their positions on a team and difference arise
LC Business – Key Definitions
The team begin to work well as ground rules and procedures
are agreed. Trust has developed amongst the team
Norming
Preforming Team members are all working
towards a common goal, a sense of unity develops. They
are working well to get the task completed effectively
Is the boss, critic and expert. They give orders, constantly
supervise staff and give employees no input in decision making as they feel they know
everything
Controller Manager
Facilitator Manager
Is the leader, provider and trainer. They give direction, encourage employees to learn new skills,
provide necessary resources, give advice and support and encourage employees to voice their opinions
LC Business – Key Definitions
Ensures quality throughout the business so that it can
produce the best products/services for
customers
Total Quality Management (TQM)
Empowerment Placing decision making,
control and responsibility in the hands of employees in
the business
Is the increase in the number of tasks that employees have to
complete. This prevents boredom and gives the
employees a more varied work load
Job Enlargement
Job Enrichment
Giving employees more difficult and varied tasks with more responsibility
and authority
LC Business – Key Definitions
Is the switching of employees between a number of
different jobs. This can lead to higher job satisfaction
Job Rotation
Gross Profit Percentage/Margin
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LC Business – Key Definitions
Is the ability of the business to pay its short term debt as they fall due e.g. wage bill,
electricity bill
Liquidity
Working Capital/ Current Ratio
Ideal is 2:1
Current Assets : Current Liabilities
Ideal is 1:1
Current Assets – Closing Stock : Current Liabilities
Acid/Asset Test Ratio
Debt Equity Ratio
If the debt capital in a business is lower than equity capital there is low risk so it is said to be low gearing. If debt capital is higher than equity capital there is high
risk so it is said to be high gearing
Debt Capital : Equity Capital
LC Business – Key Definitions
This is where information is gathered, recorded and analysed by ourselves or
for the first time
Field/Primary Research
Desk/Secondary Research
Analysing data that has already been
gathered and recorded by someone else
Is the gathering, recording and analysing of all the data
concerned with the transfer of goods or services from the producer to the consumer
Market Research
Import Substitution
Where a product that is currently being imported is
substituted by a home produced product of a similar price and quality e.g. Fiacla Toothpaste
LC Business – Key Definitions
A business comes up with ideas for a new product or service from internal or external resources. Internal ideas can be from staff suggestions and brain storming sessions. External
ideas can be from customer feedback or from observing competitors
Idea Generation
Product Screening
All ideas are examined by conducting a SWOT analysis on each idea. The business picks the greatest one for
development
Involves turning the idea into an actual product or service by identifying its Unique Selling
Point (UPS). The product/services appearance
and function are also assessed
Concept Development
Feasibility Study
Is an investigation whether the product/service is possible to make at a
reasonable cost, will it sell and generate a profit
LC Business – Key Definitions
Involves developing the first working model of the product.
It tests out the product to identify areas of improvement
before full production
Prototype Development
Test Marketing
Involves launching the product/service to a small segment of the market and evaluating the
customers response to it. Consumers thoughts are used to refine the product to reduce the
risk of failure at launch
Production begins and the product in made available for sale in the entire market. A
marketing campaign begins to promote the product
Launch
Marketing Is the management process responsible for identifying,
anticipating and satisfying the needs of customers profitably
LC Business – Key Definitions
Is a particular group of people or segment of the market that a particular product is aimed at e.g. Studyclix.ie is aimed at Second level students and
teachers
Target Market
Niche Market
Is a small segment of a larger market which is the marketing of a particular
product or service. It is identified through market segmentation.
Customers are willing to pay a higher price for the product/service that
meets their needs e.g. bridal shoes
Is dividing up a market into clearly identifiable sections
which have common characteristics such as age, gender, income and location
Market Segmentation
Marketing Concept
Involves identifying and satisfying customer needs profitably. The
business puts the customers first and tries to have the right
products in the right place at the right price
LC Business – Key Definitions
When a profit margin is added on to the direct cost of production of goods to
set a final selling price
Cost Plus Pricing
Premium Pricing
Charging a higher price for goods/services to create an impression of high quality e.g. Coco Chanel perfume
Selling a good/service at a low price initially to capture market
share. High sales will compensate for low profit margins e.g. Lidl, Penneys
Penetration Pricing
Discriminatory Pricing
Is charging different prices to different customers e.g. train
tickets are cheaper for children and students than adults and free for people 66 and over
LC Business – Key Definitions
Involves charging as high a price as possible when demand is high in order to maximise profits e.g.
The price of sun holidays in Summer months versus the price
in Winter months
Price Skimming
Price Is what is charged for goods or services once factors such as competitors prices, cost of
production, demand, target market have been considered
Is all the efforts used by a business to let potential customers know about their products and to encourage them to buy the products e.g. Advertising, Sales Promotions, Public Relations
and Personal Selling
Promotion
Advertising Is the communication of information to persuade
customers to buy a particular product or service
e.g. TV advert
LC Business – Key Definitions
Is the use of short term incentives to attract customers to a product or service and to encourage them to purchase the product/service e.g. Special offers, free samples,
collecting tokens for a prize
Sales Promotion
Public Relations
Refers to all the activities related to creating a good public image for the product/service. It aims to achieve
favourable publicity and build a good corporate image for the business e.g.
Lidl sponsoring Ladies G.A.A
This is the process of getting the product to the consumer. A distribution system is essential
to move products from the manufacture to the consumer
Place
Channel of Distribution
Describes the various paths that products take to get from the manufacturer to
the consumer
LC Business – Key Definitions
Is the production of a specific customer order. It is once-off
unique production that is not held in stock. Highly skilled labour is
required making it expensive e.g. A wedding dress
Job Production
Batch Production
Is the production of certain quantities of identical products in one production run and then production switches to a different batch.
Products are average price as they require semi-skilled labour and are held in stock in
anticipation for customer demand e.g. clothes in different sizes and colours
Is the production of a large number of identical products. It requires low labour costs as company can benefit from economies of scale so products
are of a low price range e.g. Chocolate bars
Mass Production
Economies of Scale
Benefits that arise in a business as it becomes more efficient and larger.
The more products that are produced the unit cost of producing each
product will decrease. A business can benefit from bulk buying and
negotiate a higher rate of discount. Larger benefits ca
LC Business – Key Definitions
This means spreading the risk and moving away from the core area of the business activity. A business may introduce new
products/services and enter a new market to reduce the risk of falling sales in one area.
The business does not have all “their eggs in the one basket” e.g. Tesco selling clothes
Diversification
Strategic Alliance
This is where two or more businesses come together on one
single/particular project. Combining their resources, skills and knowledge. This business will continue to operate
separately in all other activities
This is where two or more companies voluntarily agree to come together and operate as one business. It is a friendly amalgamation of firms for their mutual
benefit. A single new entity is formed once shareholder of both firms agree to the
merger e.g. Irish Permeant and Trustee Savings Bank merged to Permanent TSB
Merger
Takeover This occurs when one company buys 51% or
more of the shares in another company in either a hostile or friendly manner. The
acquiring company obtains control of the other company, which loses its identity.
Takeovers are very expensive e.g. Google paid $12.5 billion to takeover Motorola
LC Business – Key Definitions
Sets out how a business is going to achieve its aims and objectives. It outlines the business description,
organisation, management, marketing, production and financial plan. A
business will need a business plan when seeking finance such as a loan or grant
Business Plan
Fixed Costs Are all the costs that stay the
same regardless of the number of units produced e.g. mortgage
on premises, insurance on delivery van
Are all the costs that will change depending on the number of units produced e.g. cost of raw materials,
electricity bill
Variable Costs
Break Even Point
Is the point at which a business is just covering its costs. They are neither
making a profit or a loss, they are just breaking even
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LC Business – Key Definitions
Is how far the estimated sales levels can decrease before the
business will start to make a loss
MS ® Forecast Sales – Break Even Point
Margin of Safety
Land Refers to the natural resources which give us the raw resources
for raw materials and energy needed for all business activates
e.g. land, water, rivers, seas
Is the human work and effort needed for a business to operate
effectively and efficiently
Labour
Capital Refers to anything man-
made used in the running of a business. It includes equipment and money
LC Business – Key Definitions
Manufacturing firms that use agriculture produce such as
milk, fruit, meat as their main source of raw materials e.g.
The Kerry Group
Agribusiness
Indigenous Firms
Businesses set up, owned and managed by Irish people with their
principal place of business in Ireland. Enterprise Ireland has the
responsibility for developing indigenous firms in Ireland
A company with its headquarters usually in their home country and branches in several other countries
Transnational Firms
Sole Trader Is a business owned and controlled by one person. The owner keeps all the profits and has complete control. A sole trader has unlimited liability and is not seen as a single legal
equity in the eyes of the law
LC Business – Key Definitions
Is a company owned from 1 up to 99 shareholders. The shareholders contribute money in return for shares and dividends.
The shareholders appoint a board of directors who run the company on their
behalf. Shareholders have limited liability and the company is a separate legal entity
Private Limited Company (Ltd)
Public Limited Company
Is a business owned by at least 7 shareholders with no
maximum required. Shares are quoted on the stock exchange and can be bought and sold by
members of the public
Is an agreement between 2-20 people to operate a business to make
a profit. A deed of Partnership is draw up which is a legal agreement
setting out the rights and responsibilities of each partner e.g.
Doctors Practice Partnership
Franchise Is a business agreement where the
franchisor grants a license to the franchisee to trade using the business name, logo and products. The franchisee can benefit from
economies of scale and using a well-established logo but they have little freedom
and must pay the franchise royalties
LC Business – Key Definitions
Is a business set up, owned, financed and
controlled by the government e.g. An Póst
State-Owned Enterprise
Community Development
A voluntary or professional effort to support and develop the social and economic activity of a local community for the benefit of the
community e.g. Leader Programmes
Are factors that have an impact on the economy
e.g. Inflation and interest rates
Economic Variable
Inflation Is in the increase in the price of
goods and services from one year to the next. It is measured by the Consumer Price Index
LC Business – Key Definitions
Is the price that has to be paid by the borrower for the use of
the money from a loan and also the reward for money saved. It is expressed as a percentage
Interest Rate
Exchange Rate
Is the price at which a currency can be exchanged for another. It is the value of the currency in
one country in terms of the currency of another country
Are non-repayable amounts of finance provided by the Government and the EU to promote enterprise and employment. They can also be given to businesses to locate in areas of greater need e.g. Boston Scientific received a grant from the IDA to locate in Clonmel to encourage employment in that
region
Grants
Subsidies Is a price support given to businesses from
the government to allow the business to sell the product/service below the market price. The aim is to increase production and reduce the price of goods/services which are socially essential e.g. CIE are
given a subsidy to provide public transport at an affordable price
LC Business – Key Definitions
Is the sale of shares in a State-owned business to
the private sector
Privatisation
Business Ethics
Is a set of moral rules and standards that provide guidelines for right and
truthful behaviour in business situations with various stakeholders.
It helps businesses to make the right, fair and honest decision regardless of
profit
Is a formal written statement drawn up by a business which sets out the
expected moral behaviours for a business in its dealing with
customers, employees, suppliers and the community in which it operates
Code of Ethics
Whistle-blowers
Are employees who’s ethical concerns are ignored in the
business so they have the courage to report the wrong doing to the
authorities or media
LC Business – Key Definitions
Is a legislative act of the EU which becomes immediately enforced in
all EU member states. It takes precedence over national laws e.g. regulation of a one person private
limited company
EU Regulation
EU Directive Is an outline of an EU law to be
implemented in member states by a certain date. National laws may
need to be changed to comply with this law e.g. Nitrates directive
Only applies to a specifically named country, organisation or
company within the EU. The decision must be carried out by
the named party
EU Decision
Open Economy
Is an economy which engages in international trade, buying and selling goods and services with other countries. Nearly 80% of what is produced in Ireland is
exported
LC Business – Key Definitions
Is physical goods or services coming in to
Ireland and money going out to pay for these goods
or services
Imports
Exports Is physical goods or
services going out of Ireland and money coming in to pay for these goods or services
Is services coming in to Ireland and money going
out to pay for these services e.g. Foreign band playing in
Ireland
Invisible Imports
Visible Imports
Is physical goods coming in to Ireland and money going out to pay for these goods
e.g. bananas, oil, cars
LC Business – Key Definitions
Is services going out of Ireland and money coming in to pay for these services
e.g. Irish band play a concert abroad
Invisible Exports
Visible Exports
Is physical goods going out of Ireland and money
coming in to pay for these goods e.g. Irish beef and
milk
Is the difference between visible exports and visible
imports
Visible Exports – Visible Imports
Balance of Trade
Balance of Payments
Is the difference between the total exports and the total
imports
Total Exports – Total Imports
LC Business – Key Definitions
Is the trade barriers imposed by governments to prevent free trade. It may be done for economic reasons to
protect native businesses and jobs from foreign competition or for
political or health reasons
Protectionism
Free Trade Is when trade between
countries is not restricted in any way
Is a tax on imported goods which will make these goods
more expensive and less competitive on the domestic
market e.g. tariff on New Zealand beef
Tariffs
Embargos When there is a total ban on the
importing of goods from one particular country. It is often done for
political reasons e.g. EU countries placed an embargo on UK beef when there were high levels of BSE in the
UK
LC Business – Key Definitions
Is a group of countries who agree to form a free trade area or common
market by removing trade barriers on the goods and services being
imported and exported amongst them e.g. The European Union
Trading Bloc
Global Business
Is a business who sells its products worldwide and sees the whole world
as its market place. It sells a standard product worldwide with
minor variations to the product for some markets e.g. Coca Cola, Apple,
Nike
Is a product that is designed to appeal to consumers all over the
world. It may have to be adapted to suit different markets e.g. Nike
runners, Toyota cars
Global Product
Global Marketing
Involves marketing a firm’s product and identity throughout the world and treating it as one market. A
global business must develop a global marketing mix and use either a standard marketing mix or an
adapted marketing mix
LC Business – Key Definitions
Is when a global businesses product is promoted, priced, distributed and
sold in the exact same way in different markets around the world
Standardised Marketing Mix
Adapted Marketing Mix
Is when a global business slightly adapts the product, its promotion, price and distribution around the world due to different cultures,
legal issues and the economy e.g. A car sold in Ireland is adapted to drive on the left side of the road with the steering wheel on the
right side of the car
LC Business – Key Definitions